Debit & Credit Card Discussion

[adam1991]

Nothing at all stops you from paying cash and negotiating a different, lower, price than what's on the price list or price tag.

But, Americans are so SCARED of their own shadows, many are pretty sure it's a criminal violation of federal law to even think about asking for something that wasn't handed to them. Hint: the answer is always "no" if you don't ask...

[blueiedgod]

It is not your money.

That mattered (a little) back when banks paid a decent interest rate on your savings and/or money market account.

until you can prove that it wasn't you, they money is not available to you.

Not true. Without any proof at all, the bank will refund your money immediately. The burden of proof is on the merchant, not you. If the merchant can't prove that it was actually YOU who did the transaction (even if you really did), you get to keep the refund. If, on the other hand, the merchant proves that it was you (which is practically impossible with online purchases), the refund is taken away from you. The system is geared to benefit the consumer, and assumes that the consumer won't fraudulently dispute a transaction (which is why online retailers don't go belly-up from a ton of fraudulent disputes).

To give an example, my ex-wife once purchased a bunch of clothing over the phone with a debit card. She (fraudulently) claimed that she never received the package, and got a full refund. The merchant was out of luck, even though the UPS driver noted that he left the package at our front door. To add more info, my ex-wife actually hid and pretended that she wasn't home so that the UPS driver would leave the package outside so that she could claim that someone must have stolen it. Another good reason why she's my EX-wife.

Cashback!!!! Between special cashback offers from Discover, AMEX, Amazon, and such, we easily clear $2000 - $3000 a year in FREE cashback.

Plenty of debit cards offer cash back too. Those are the "rewards" programs I was talking about earlier.

I don't know if things changed in the last 10 years, but about 10 years ago, a friend's debit card (who despite my pleadings not to sign up for it, still did, and used it extensively) was compromised. Whoever got the numbers went on a shopping spree until his checking account was completely empty. It was a frustrating couple of weeks for him, as he had no other source of funds (he never got a credit card).

Perhaps things are different now, but I do see that when I use debit card, at like Aldi's (which do not take credit cards, and it will be a cold day in hell when I have more than $20 in cash on me), money comes out of the account right away.

As to the cashback, sure, the game is stacked against someone who can't keep track, but not us. NEVER EVER do we carry balance. If we can't afford to pay for something today, it does not go on the credit card. However, the cashback is sweet. Pay for 2 kids in day care with Discover, get 5% back. Once a year, we get a special offer from them to spend $3000/month for 6 months for an additional $1000 in cashback, and we make sure that we do. Even if it means buying gift cards to meet the minimum monthly requirement for the program, or launder money through Amazon payments. We can always use gift cards later. Everything goes on the card.

Right now, AMEX is offering pretty sweet statement credit (on top of the rewards points) across the board: $5 off $30 on gas at Shell and BP, $5 off $5 at dunkin donuts, $15 off $150 at newegg, $20 off $100 at Tiger, $5 off $5 on itunes, $15 off $75 at the Home Depot, $10 off $50 at grocery stores (3 times)... it is just there for the taking, and most people don't take it.

[IownFIVEechos]

Pay for 2 kids in day care with Discover, get 5% back.

How do you consistently get the 5% on a day care type purchase? I always see things like 'home improvement' etc.. And it is usually limited. You know a trick? Please share.

[barnabas1969]

OK, first, I need to eat some crow. I said that there are plenty of debit cards with good rewards based on my memory of setting up some pretty sweet ones over the years for some of our clients. I did some searching, and it turns out that all of them have been discontinued. I did a little more searching, and it turns out that's due to the passage of the Dodd-Frank Act, and its limits on "swipe fees". The trend these days is to pay higher interest on your checking account if you meet certain criteria, and the criteria often includes a minimum number of signature-based debit card purchases (among other things like direct deposit, minimum balance requirements, etc) to qualify for the higher interest rate. The higher interest rate usually wouldn't amount to as much as the old cash-back deals on debit cards.

So, yes, rewards on credit cards are definitely a good reason to use a credit card instead of a debit card.... IF you pay off the balance every month.

But, what Adam said in the beginning of this argument, and he continues to repeat it:

It's the same argument against using debit cards: once they have your money (and they do, a debit card is an INSTANTANEOUS TRANSFER card), there is no incentive for them to give it back and every incentive for them to put roadblocks in the way of your getting it back.

But again a credit card is different. Chargeback? Absolutely. You try to screw me over by selling me goods not suitable for the intent for which they were sold (that's the basis of a "warranty of merchantability"), and if you won't make me whole I'll just let the credit card company deal with you. Good luck. In the meantime, it's not money out of my pocket at all.

Is just not true. If you have a problem with a merchant who won't refund your money because they didn't deliver a product or service as promised, you can absolutely call your bank and dispute the transaction just like with a credit card. The bank uses the same process for debit card disputes as they do for credit card disputes. Merchants really don't want you to dispute a transaction. When you tell the merchant that you're going to dispute a transaction, he is much more likely to work with you. This is because he will not only be out the money for whatever he sold you, he will also have to pay a pretty hefty charge-back fee (usually around $30-35).

[blueiedgod]

Pay for 2 kids in day care with Discover, get 5% back.

How do you consistently get the 5% on a day care type purchase? I always see things like 'home improvement' etc.. And it is usually limited. You know a trick? Please share.

Whenever they have the promo, we pre-pay for the whole year. The bill is still going to be paid, regardless when, so we maximize the savings. Plus, the school gives us 5% discount for pre-pay.